Bank of America Earnings Surprisingly Weak

NEW YORK – Bank of America Corp. (BAC), the No. 2 U.S. bank, on Monday posted a surprising 2 percent decline in fourth-quarter profit as consumer bankruptcies drove up loan losses and trading profits slid.

Net income for the Charlotte, North Carolina-based company fell to $3.77 billion, or 93 cents per share, from $3.85 billion, or 94 cents, a year earlier. Revenue rose 3 percent to $14.12 billion.

Excluding merger and restructuring charges, profit totaled 94 cents a share. Analysts expected profit of $1.02 per share on revenue of $14.59 billion.

Pretax profit was reduced by $320 million from a surge in bankruptcy filings ahead of tougher, more creditor-friendly laws that took effect October 17, and changes in the bank's policies toward overdrafts. Net charge-offs nearly doubled to $1.65 billion from $845 million.

Meanwhile, trading account profit fell 51 percent from the third quarter to $253 million, and 6 percent from a year earlier.

In a statement, Chief Executive Kenneth Lewis said, "we had a weak trading quarter" and "fully expect" to do better in the future. He also said the bankruptcy issue "will not recur and should actually benefit us going forward" because of fewer new filings under the new law.

JPMorgan Chase & Co. (JPM), the No. 3 U.S. bank, has also reported weak quarterly trading results, while that bank and Citigroup Inc. (C), the largest U.S. bank, reported large losses from bankruptcies.

Results exclude the roughly $34.2 billion purchase of MBNA Corp. on January 1, which made Bank of America the largest U.S. credit card issuer by balances.

Profit rose 10 percent in consumer and small business banking profit to $1.76 billion, fell 7 percent in business and financial services to $1.14 billion, rose 32 percent in wealth and investment management to $636 million, and sank 79 percent in capital markets and investment banking to $123 million.

The bank ended the year with $1.29 trillion of assets, up 16 percent.

Bank of America shares closed Friday at $44.19 on the New York Stock Exchange. The stock had fallen 2 percent in the last year, compared with a 1 percent increase in the Philadelphia KBW Bank Index.